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tv   Power Lunch  CNBC  February 26, 2014 1:00pm-2:01pm EST

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>> pete? >> bmw. i think this will get to 100. >> ssd. >> joe? >> josh, congratulations on your victory. also, i believe verizon has bottomed. >> have a great day. "power lunch" starts now. "halftime" is over. "power lunch" and the second half of the trading day start right now. >> indeed it does. welcome, everybody. some big news on your house today. perhaps the top rated housing sector analyst in the business on "fast" one half hour ago. see what way she thinks the market and the stocks are heading on a day when we got another big housing number. new home sales up more than 9%. not swiss cheese, but swiss cheats. new and damaging information coming out today regarding how swiss bankers help wealthy americans evade taxes.
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it involves panty hose, all sorts of things, including even secret elevators. we will talk about that. plus a physical attack on the wealthy. one affluent town in california has been hit hard. speaking of wealth, the wealthiest neighborhood in the u.s. not by zip code or by county. we will go street by street. tyler is out today. simon is at the nyse and we will get downtown in just a second. first, that big news on housing. diana olick is in the house and she has been talking to the biggest name in the business, ivy zelman. >> the noted analyst famous for calling the top and bottom of the latest housing cycle, last spring she said here on cnbc that we were in housing nirvana. by fall she revised her outlooks down. today she explained why. >> i think nirvana took a pause, during that time house prices -- home prices were surging and we had very attractive affordability and a few months after i was on, we had rates
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spike about 100 plus basis points and we saw a pause. the consumer was rationally responding to the surge in prices, the backup in rates. >> she did not seem particularly concerned about affordability and she sees credit loosening a bit. she did say, however, she doesn't believe the government report today on a 9% jump month to month in january new home sales. her numbers say sales were flat, largely due to lack of supply which she added is about to change. >> what we hear from builders right now, they did not have enough communities to meet demand in 2013. they were caught by surprise by the surge in demand so they didn't have enough developed lots to open up new communities. well, this year, they caught up and they are very prepared. we will have double digit increases in new communities. >> what was most interesting to me, she did not dismiss the idea of investors getting into the new home market, into new construction. i have spoken to a lot of investors who say there is just not that much low price supply out there to buy and they are
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looking at buying new construction, and that could mean a lot for the builders going forward. zelman says it's still a small percentage but didn't dismiss it. that's interesting to me. >> she didn't dismiss it. but along the lines of that demand ratio, because if you look at the unemployment reports that we've had that have been iffy and subject to a lot of revision, the participation rate in the labor market has been at record lows and wages haven't been growing so it doesn't seem to match up with the increased demand she's looking for. >> well, ivy always looks at demographics. she says we have this many people here, there must be that pent-up demand and it should come in as the builders start to put more supply on the market. a lot of folks do say that sales have been slow because of this lack of supply. but i believe that affordability is a big block to a lot of buyers getting into this market. i talked to the realtors, to the buyers, to the mortgage lenders who say folks just don't have large enough down payments to qualify for the credit they need and they are not able to get into this market as prices continue to go up. >> yep. that makes a lot of sense.
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thanks so much. good to have you up here. to dominic chu for a market flash. >> check out shares of aquin financial. there are new concerns about the company, one of the nation's largest mortgage servicing companies. in a letter, he said his office had found a number of potential conflicts of interest between ocwen and other public companies with which it's affiliated, that it really could work with. it can harm borrowers, push homeowners into foreclosure. so those shares drifting toward session lows. >> a big percentage loss there. thanks very much. breaking news in the bond market. the five year note going up for auction. the two year yesterday. got an a-minus what about today, ricky? >> if you have $7.3 trillion in national debt, this is the kind of auction you want to see. a for apple, solid pretty much on every metric. let's go through it. 35 billion, the w.i. was 1.54
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offered at 153 1/2. we priced it under the offer side. 1.53 is the ultimate yield, lower yield, higher price. that's solid. we look at the bid to cover was the strongest since september of 2012 at 2.98, ten auction average is normally only 2.59. the only thing that was light was directs at 9.2. dealers take about 40%. a for apple. tomorrow is the last of the supply, 29 billion seven-year notes. back to you. >> thank you very much. swiss cheats, the swiss banking system on the hot seat in washington today. the senate governmental affairs committee is investigating how thousands of wealthy americans evaded taxes with the help of big swiss bankers. our chief washington correspondent john harwood is on the hill. how did they do defending themselves? >> reporter: they did okay. it wasn't a very contentious
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hearing. most of the attention around this hearing was on the cloak and dagger methods that the investigations committee which is now adjourned for a couple hours, uncovered about how 22,000 secret accounts were maintained and fostered by credit suisse. you're talking about a full service office at the zurich airport to enable customers to go straight to the ski slopes and do their business after they got off the plane. you have a remote controlled elevator, you had cash hidden in pantyhose, you had bank statements stuffed in "sports illustrated" magazine, fake visa applications. all of this was used to conceal from taxation money from u.s. clients. now, the credit suisse people defended themselves, said they shut down that line of business. we had get to the part this afternoon where the senators are grilling the department of justice which they say has dragged their feet on enforcement and going after the names of some of these bank
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customers, what they're sure to say in response the department of justice officials is there is a tax treaty pending with switzerland that has been held up in the united states senate. if that treaty is passed, the credit suisse officials said this morning many, many more of those names could be turned over to the united states senate. >> i guess the swiss have always been fairly inventive. john harwood, thank you very much. of course, it's been a huge year for cybersecurity stocks. fireeye up more than 300% in just one year. shares of competitive check point up 7% in just a month. in fact, the cyber guys are meeting in san francisco today. eamon javers is there with more on the stocks in this sector and the new possible buyouts. eamon? >> reporter: all that bad news you are talking about for consumers and for retailers in terms of cyberhacking is really good news for the people who are walking this floor. this is the rsa cybersecurity conference out in san francisco. the folks here tell me they are expecting a wave of mergers and
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acquisitions throughout the year as the consolidation continues in this industry as the big players try to snap up a lot of innovation from some of the smaller firms that are in this space. i talked to raj shah who sold his company earlier this year to p palo alto networks. take a listen. >> i think the characteristics that make a company a good acquisition target is a very strong theme and truly disruptive technology, not a me too approach to an existing problem. i think if you marry those two with good customer attractions and there's a nice fit with the parent company, it makes a nice fit. i certainly can see more of that. >> reporter: analysts put together a list for us of some of the potential acquirers and potential sellers in this space. take a look at some of these big names. emc, microsoft, symantec, ibm,
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oracle. the targets are kind of interesting, though. fortinet, imperva, proofpoint, qualys as well. they say the buyers are walking the floors here of this exhibition hall not just to buy the technology and software but to buy the companies themselves. >> interesting to see the quotes of the potential targets. eamon, thank you very much. eamon javers there. we are up 40 points on the dow. >> check out shares of itt educational services. the stock is plummeting on news the u.s. consumer bureau sued the for-profit college chain for pushing its student into high cost private loans that were likely to end in default. those shares down about 11% in trading so far today. keep an eye on this es ishares. >> we sure will. thank you very much. the drought of course a big problem in california.
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it's historic. but some relief is on the way in the form of rain and some snow up in the mountains. here's the weather channel's tom niziol. >> we got two significant storm systems that will impact california with rain and snow beginning today and running into the weekend. let's show you the setup for this. we have systems that are really going to undercut an upper level ridge here and bring moisture into california, both today and then going into the weekend. this is much-needed rain and snowfall for that parched region of the u.s. here's a look at the mountain snows and rain that will hit the area. most of the state will be included under this. the snow is back into the sierras and here is this rainfall forecast as we go into saturday. a general three to five inches along coastal areas, two to three inches for much of the state. by the way, some of the foothills could see as much as six inches of rainfall. what i don't like about that, it is going to bring up the possibility of some flooding, especially in some of the burn scar areas, colby, madison, powerhouse, those regions in southern california.
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we take a look at the snowfall, that natural reservoir, snow pack of the sierra going to be infused with a foot to a foot and a half of snow through friday morning and more snow is likely through friday afternoon and evening. all in all, this is great news in most aspects for california. we just hope too much rain doesn't come too soon. stay tuned. back to you. >> tom, thank you very much. check out nat gas. prices are falling again today. third session in a row, hitting two week lows. traders are cashing out of the march contract because it is expiring. they are looking ahead also to spring which we hope will bring milder weather. despite the big drop, nat gas prices are still up more than 15% year to date. meantime, the rollback on sanctions providing a big boom for iran. reuters reporting that iran's oil exports jumped in february, the fourth straight month that the islamic republic has seen a rise in its exports. they are now at about 1.3 million barrels per day. indonesia, syria, south korea, india and china are some of iran's biggest oil customers.
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since the interim deal was announced, brent crude has been pretty much flat, up just a little better than .1% today. simon? we have two big stories on the wealth beat coming up. robert "money bags" franks is back. >> first we will take you on a tour of the richest neighborhoods in america and none are in california or new york. we will tell you who tops the list and what their residents earn. then, living in those wealthy neighborhoods could make you a target. a town in california that's filled with billionaires just got tagged with graffiti attacking the 1%. we will show you the shocking police pictures and tell you why the fbi may get involved. [ male announcer ] legalzoom has helped start over 1 million businesses.
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what is this place? where are we? this is where we bring together the fastest internet
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and the best in entertainment. we call it the x1 entertainment operating system. it looks like the future! we must have encountered a temporal vortex. further analytics are necessary. beam us up. ♪ that's my phone. hey. [ female announcer ] the x1 entertainment operating system, only from xfinity. tv and internet together like never before. welcome back to "power lunch." check out uti worldwide getting hammered on ten times its normal trading volume. the company says it breached some debt covenants and would report a loss in the fourth quarter due to lower demand for air freight, saying it will have to raise more than $525 million in capital to pay off about $400 million in debt due in april. those shares down on the news. sue? >> down almost 25%. wow. thank you so much. the wealthy are under scrutiny as income inequality
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becomes a national debate and major political topic as well. the class warfare is escalating and has the fbi involved. our wealth editor robert frank is here with more on that. this sounds frightening. >> it is, a little, especially for the residents. the wealthy town of atherton, california has been tagged with anti-wealth graffiti. pictures here from the police showing that fences, garage doors and even cars have been spray painted with the same slogan, f, can't tell you the rest of the world, the 1%. the police so far have no suspects or leads. they are telling residents lock their doors and windows and keep their valuables secure. the police have also contacted the fbi. this could just be a couple kids making trouble but police want to make sure it's not part of something more organized like the occupy wall street effort. atherton is one of the richest towns in america, people like meg whitman have called it home. this suggests the anti-wealth sentiment we have seen in san francisco could be spreading to silicon valley. >> you mentioned atherton.
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we know that's an affluent town but where does the other half of the 1% live? >> interesting, all over the place. today we have a ranking of the top neighborhoods and you would think that new york and california would have the richest neighborhoods. sorry, guys. it's actually maryland that has most of the top neighborhoods. a new study of the 100 wealthiest neighborhoods shows that three of the top five are in maryland. this is a list based on mean household income compiled by a professor in alabama. the number one richest neighborhood in america is the golden triangle, that home to all the hedge funders. the mean income there, $614,000. the rest of the top five, almost all in maryland. the bradley manor-longwood section ranked number two with income of $614,000. potomac manors ranking third and carderock ranking fifth. the demographics of these high end neighborhoods also getting much more diverse. in the number four ranked place,
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in coral gables, 47% of the population is now latino. mostly cubans, a lot of them entrepreneurs. >> absolutely. i was just in maryland. that longwood section is beautiful. it's really, really pretty. and pricey. >> yes. exactly. >> i was just looking. just driving through. don't panic. thanks so much. simon, down to you. here's a question. which hot tech companies do the smartest minds in america want to work for? it may not be apple. seema mody and josh lipton on those stories. seema? >> institutional ownership of apple is at a record low. i will walk you through the stats and the reason behind this coming up after this break. coming up, power pitch. this startup wants to make electronics fun by putting the power in your hands. imagine, invent and create. does it have the power to succeed? stay tuned. tdd#: 1-800-345-2550 ...you see opportunities.
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welcome back to "power lunch." check out shares of ebay right now. we are focusing on them only because they responded to carl icahn. they don't want to let the truth get in the way of a good story. ebay saying his statements are not factually accurate, again responding to the carl icahn overtures with regard to ebay and pay pal. they are saying again his overtures, his claims are not at least factually accurate and they go on to lay out all the
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details. very interesting development in the carl icahn versus ebay saga. simon? >> thank you very much. one reason why the nasdaq is hitting a new 14 year high for a third straight day, apple clearly a big stock to watch in advance of the shareholder meeting friday. let's remember that. over to you. >> that's right. a new high for the nasdaq but no love from apple. a new report from morgan stanley reveals that institutional ownership of apple is at a record low and that the top 30 holders are allocating 2.2% of their fund to apple compared to a high of 4.1% in the last five years. analysts write that sentiment is negative as most funds are questioning apple's ability to grow revenue long term. apple shares lacking momentum in 2013. in a very similar story this year, down 7.5% despite the moves in apple, the tech sector still up. typically when apple underperforms the nasdaq follows. thanks to strong interest in some of the social media and momentum players, the nasdaq powering to new highs. simon?
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>> thank you very much. let's send it over to rick santelli at the cme. >> reporter: you know, it's interesting, the auctions are going pretty well. think about it this way. if you looked at the last time that we had a five year note auction, it went off about 20 basis points higher in yield and the dow was roughly, and the s&p roughly at levels that are very close -- sorry, lower than we are today. that speaks volumes. look at a one day chart of fives, great auction. a one day chart of tens. part of the reason rereversed, russian buying, what's going on there, you can see what the market's done. the last chart, most common chart on the floor, the dollar versus chinese currencies, the dollar continues to do better. back to you. >> thank you, rick santelli. it is time now for the power pitch. that's where we give
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entrepreneurs 60 seconds to make their pitch and our panel decides if they have what it takes to become the next big thing. >> hi, everybody. i'm mandy drury. on today's power pitch we have a startup that invented a new high tech version of lego. we have the ceo and founder of little bits. she studied engineering and is an alumni of the m.i.t. media lab. she was awarded a fellowship. let's take a look at her power pitch. >> i'm the founder and ceo of little bits. little bits is a library of electronic modules that snap together with magnets for learning, prototyping and play. essentially each module is like a lego brick but it's electronic. it has one function like light and sound and sensors and motors and you can combine them in any configuration to make your own robot or your own toys or your
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own functional prototype. many large technologieses that have changed societies usually start in the hands of experts and then become accessible to every day people. for example, manufacturing used to be something that only large companies with a lot of capital could do. now with the 3d printing revolution, anyone can participate in manufacturing from their own home. we are doing the same thing for electronics. we want to put the power of electronics in the hands of everyone. we sell individual bits but also kits. we're in about 500 schools and we sell online and we are based in new york city. >> you can see ayah on the right side of your screen. she can hear us but can't react just yet. on our panel today, we have katherine barr. she is co-chair of c-100, a tech entrepreneur association and also advisor to the accelerator program 500 startups. also on the panel is jeremy conrad, founding partner of
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hardware incubator which provides mentorship to engineers. he was captain in the united states air force where as lead engineer, he was responsible for several airborne laser military projects. great to have you both with us. let's huddle up on little bits. katherine, first, what did you think? >> i think she is incredible. i love the product. it's very unique. one of the questions i have is how they plan to make this massively scaleable, in particular given the pricing. >> what about you, jeremy? >> my biggest concern actually comes down to the manufacturing. they often compare themselves to lego but when you look at lego, they have unique manufacturing and high quality operations in the world. >> i'm a little concerned about the amount of competition out there and once you've got one kit, would you go back to buy another. i really don't know. let's bring ayah in and put her on the hot seat. katherine, first question goes to you. >> are you planning on making the bits internet enabled at all? >> it's been in development for a long time. it's set to launch for early next year. we also have a lot of other very
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interesting programmable and powerful bits that are also coming out next year. >> what is it about your little bits that would make someone buy one kit but want to buy another after that? >> little bits is a library of electronic modules that snap with magnets. it's really about the library and how many you have. the more you have and the more interesting modules you have, the more interesting things you can do. for example, you could have a buzzer sensor and a power bit and you can make an alarm that triggers when somebody comes into the room. if suddenly you add on top of it a light sensor, suddenly you are responding to the environment. what we do is make the kits and we see this consistently, people buy the kits and then come back and buy another kit, then they come back and buy individual bits. >> what's the repeat customer rating? >> right now between 15% and 20%. it's something that we continue to try to grow. obviously a lot of the first two years of the business have been about building the core customer base and the core product line. >> when i think of lego, one of the interesting things about it, they run their manufacturing operations and have amazing
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quality control. you can take them from this year and they still work with legos 50 years ago. do you worry about because you're open source someone else could take your designs and manufacture them more cheaply? >> we have a very balanced kind of approach to open source where we trademark our name and still hold patents for the connector and the system in general, so ultimately if you want to make something you want to call little bit compatible, it would have to come after being vetted by us. >> you were founded in 2011 so you have been around a couple years. what's your monthly revenue? >> we are not actually disclosing that. i would say that i started working on little bits in 2008 so the product has been in development for far longer than that. but the company has only been around since 2011. >> how much of your sales channel do you believe is going to be education versus the general population? >> right now, our education channel accounts for about 15% to 20% of our sales. the interesting thing is it comes with very little effort from us. i think the ratio will likely dip a little bit as we go into more larger distribution
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channels and more direct, maybe 10%, 15%, but it's something we want to continue to grow. >> okay, guys. you heard what ayah had to say. are you in or out on little bits? katherine? >> i think she's a brilliant entrepreneur. i love the product. i'm in. >> jeremy? >> i love the product. i played with it myself. my biggest holdup is i just think the toy space is very difficult, especially educational based toys. i'm out. >> i think i would like to maybe wait a little until i hear more statistics on revenue and margins and things like that before i would open my checkbook at this stage. ayah, thank you very much for joining us. you have two outs although mine is kind of a hedge sitting out, and also one in. what's your reaction? >> obviously it's not a business for everybody. part of what we're doing is really sort of creating a new category that's really not exactly in the toy space, not exactly in the electronics space so you really can't sort of look at it like that. you guys will have to wait and
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see. >> thank you very much. that is today's power pitch. >> i bet she will do just fine. we want to hear from you. are you in or out on little bits? log on to powerpitch.cnbc.com or follow the conversation on twitter. so where are the hottest tech companies going to get the best work experience? josh lipton is live in stanford, california, speaking with some of the smartest young minds in america in one of the most beautiful parts of the world. so jealous. >> reporter: absolutely. that's right, sue. instagram's founder of course sold his company to facebook for $1 billion. here at stanford university, students getting ready to graduate and some of them of course dream about creating the next instagram, so they do what he did. they take part in the stanford technology ventures program or stvp as it's called. the program started back in
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1988. its mission is to teach students how to succeed as high tech entrepreneurs. its alumni have worked all over silicon valley from google to silver lake partners. every year you have about 2,000 students take part in the program. they study entrepreneurship, finance, business strategy. many create their own business ideas which they actually present to a panel of sand hill road venture capitalists, sort of stanford's own version of cnbc's "shark tank." >> i thought if i want to make -- if i want to take some of the ideas and turn them into reality, it would be very helpful to have the support of stvp and to learn how to sell my ideas to the investment community. >> reporter: right after graduation, some students work for tech titans in the valley. others are more interested in starting their own companies. one success story, for example, skybox imageing which builds satellites. that company was started in this program five years ago. it's already raised about $91
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million in funding. one thing is clear. after the students collect their degrees in the spring, they are probably going to be some of the people behind the electronics and companies that transform your future. simon? >> i can't wait to see it. thank you very much. let's have a look at where we are on gold at the moment. we slipped from the four month high, still above the 200 day moving average which of course will make some people quite cheery. for the stock market, the s&p is near record territory again. small caps, new highs and the nasdaq hitting a new 14 year high. four sectors you should be in next from the man who manages more than $900 billion for jpmorgan. plus, marijuana and money. don't miss the premiere of cnbc's new documentary tonight, pot in america, colorado pot rush. that's 10:00 eastern. legal sales of pot reached $2.5 billion a year in america. now we will speak with a lawyer turned pot store owner about how
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welcome back to "power lunch." check out sales force.com.
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the ceo saying if arizona passes a bill to refuse service to customers based on religious beliefs, his company will never do another corporate event in arizona. he tweeted it, good-bye to two of my favorites there. watch those shares. simon, back to you. let's get on the trading action. bob pisani joins us from the floor. the retailers are really flying today. >> reporter: the market turned around around 10:00 eastern time. put up the s&p 500. more pain for the shorts, new home sales came out 10:00. see that move up? rocketed up on that. much stronger than expected on new home sales, bucking every major housing report so far. that's what i mean, pain for the shorts out there. look at the home builders. this is the best day they've had all year. simon's right. look at the retail guidance for the guys who reported today. lowe was below expectations for 2014. target, dollar tree, tjx, abercrombie & fitch at the low end. you would think these stocks are
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not going to do very well today because stocks move on guidance. put up the major moves here. there you go. the bottom line is this. we see a lot of companies taking off shorts today. look at the other retailers. these guys didn't say anything, didn't have any news out but they're moving up because we are getting shorts being taken off. remember, every retailer talked about it was the coldest winter in 20 years so a lot of analysts went in dreading what was going on. now that we have the guidance we are getting, while it's disappointing, the amounts of the guidance below expectations is not tremendous. there's a little bit of sigh of relief. bottom line, it's not quite as bad as everyone had feared. that's why we are getting -- >> a lot of talk of a bounce-back as soon as the weather clears. for the moment, thank you very much. we've got the s&p in record territory, the nasdaq hitting a new 14 year high. what does that say to you as an investor? welcome back to the program richard manegan. he and his team of 47 people
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have $977 billion under management. joe greco is with us from meridien equity partners trading, more of a trading view. richard, what do you think of the market now? >> we like it. constructive in terms of the broad outlook of markets right now. we think we're in a market environment that favors earnings growth, margins are still strong and money is still coming in. short term macro data will confuse. lot of momentum back and forth so your trading colleagues will have a ball and make a fortune. long term holders should be in the market. >> i appreciate the optimism but that's really it. there is a juxtaposition between the people that seek your services and want to put their money to work over the longer haul, have a much bigger vision. you have a ton of money, a few tons of money, that you have to manage and not so easily because it's not a very nimble quantity. we are a smaller outfit but we trade. >> don't justify yourself. i'm just saying what do you think of the market?
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>> the market's great. it's clearly a stock picker's year. if you want to jump on the band wagon with the activists out there, there's a lot of opportunity there. there is also opportunity if you do your home work. verizon has been a great trade the last few days. getting in and out quickly, there is money to be made. >> you are nodding about a stock picker's market but you think health care and financials are where people should be. that's been a 13 month trade. >> i will give you a quote you can take home. you can make money with consensus. right now, we are waiting for a cyclical inflection in markets in terms of rates and where we're going. earnings which are still strong. and we have been as tactical i think in terms of trying to find the right short term opportunities. health care demographics in cash reserve in m & a activity are huge. tech from the productivity sector is going to be the single driver. >> but on the central point of this outperformance we have had from health care in particular,
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50 basis points above everybody else, as you look forward, shouldn't you -- maybe you are too conservative. maybe you are slow money. maybe you are buy and hold. maybe very rich people don't move very rapidly. shouldn't we be going to what is the next bounce of the ball? shouldn't we be buying low in order to sell high? shouldn't we be buying emerging markets? >> you actually hit my favorite theme which is you should think of pools and pockets of money long term and what you're trying to do to beat inflation and grow it and short term being very tactical. we have been selling emerging markets for nine months. i still own asia, japan, see a lot of upside in it. i will be the first person back in very tactically very fast for all the rich people making the money trading the market. >> we have to leave it there. thank you for joining us. nice to see you. sue, over to you. >> gentlemen, thank you so much. did you know 18.9 million people used pot in the past month in america? a new documentary "pot in
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america, colorado pot rush" premieres tonight right here on cnbc at 10:00 p.m. eastern time. we'll have a sneak peek coming up next. before the break, this video from virgin america passenger jessica elkis from san francisco to san diego, that's the flight attendant named mickey dancing in the aisles. a new way to get people to pay attention to the safety rules. they are calling it the safety dance. virgin america told us he has a unique approach in demonstrating the safety video. a former figure skater, we applaud his creativity and think it works. you go, guy. back in two. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up.
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predibut, manufacturings a prettin the united states do. means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources to get the job done. a new documentary premieres tonight at 10:00 p.m. eastern time right here on cnbc. did you know there are about 6600 new pot users per day?
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just who are these guys? nbc news correspondent harry smith tracks them down. >> yesterday i was a stay at home mom, today i'm a stay at home mom who can legally smoke marijuana. >> reporter: they have come to the new frontier of recreational pot. is anybody high so far? >> i feel buzzed. >> yeah. i've got a nice beginning of a light buzz. i'm sure another ten minutes or so, it will set in a little deeper. >> reporter: pot tourists who paid $500 apiece to indulge in the pleasures of a state sanctioned high. there's your first legal marijuana -- >> i know. so exciting. my heart is racing. i'm feeling a little sweaty. i'm nervous. but i'm super excited. i feel like i'm almost looking over my shoulder, like should i really be doing this right now. but i am. part of history. >> welcome to the new legal cannabis industry. >> reporter: we traveled to las vegas where we found 140 venture
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capitalists looking to get in on the action. troy dayton is ceo of arcview, an investor network focused on the marijuana industry. >> if you want to be a pioneer, if you want to be part of the next great american industry, then i think this is a good place to play. >> reporter: he predicts the u.s. legal pot market will be worth $10 billion by 2018, as more states come aboard. >> there's a geyser going off right now. and everybody's trying to figure out who is going to sit on top of it as it shoots off. >> that's just a taste of what you can see tonight. don't miss "marijuana in america, colorado pot rush" tonight at 10:00 p.m. eastern time only here on cnbc. in the meantime, brian ruden runs starbucks of denver and since we last spoke to him on this program at the beginning of january, his business has been brisk. he's hired two employees, a doorman and a bud tender as they
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call him to handle the overflow. welcome back to the program. welcome back to "power lunch." >> thanks for having me again. >> so we saw you, you have been doing medical marijuana, then right at the beginning of january, we spoke to you about recreational marijuana. i think just a day after you started selling that in addition, how has it gone since then? >> january was just huge. we saw 10 to 20 fold increase in demand and customers. we were all running around like crazy because we just couldn't handle the crowds. since then, it's died back, become more manageable. i would say now we're running maybe seven times what we did when it was medical. >> so as a businessman, what do you now look to do? >> you know, the next step for us is to get more grow capacity so we can keep up with demand. from there, look at some new spots and maybe get another couple stores open.
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>> when we spoke to you before, this is very common throughout the entire legalized marijuana business, you were carrying sacks of cash, quite literally, to pay some of the fees you had to at the city level. is that still the case? do you have banking facilities? >> well, we just paid -- i just paid my sales tax to the state last week. we had an armed guard with us. we brought two boxes full of cash and turned it in. so the state accepted our cash. we don't have banking yet. i know eric holder came out with new guidelines for banks but speaking to the bankers, it's not good enough for them. they are waiting for something more concrete before they will start doing business. >> in case they turn back on them. one last question, if i may. we were asking you before about the logo you have and the name that you have, starbuds, on whether a larger competitor that sounds similar might send its lawyers over to you. did you hear from the attorneys of starbucks? >> no, i haven't.
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>> you suspected at the time that you might not. good to see you. thank you very much for joining us. brian ruden, the owner of a legalized retail store of marijuana in denver. let's get a market flash. >> how about another retail store. check out best buy. the stock spiking up to session highs on a new york post report that the nation's biggest electronics chain is in the midst of cutting up to 2,000 managerial jobs. no store closings are said to be planned. the stock again still up about 3% to session highs. back to you. delta's frequent flyer program now tied to how much travelers actually spend on tickets. rather than on the miles that they travel. what's your take? if you logged on to the "new york times" home page today, you temporarily saw all the text turn to russian. a clever ad takeover or quite a scary moment for journalism? b j.
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time for the power rundown. today simon of course is with us and bob pisani. guys, let's start out with
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delta, changing its frequent flyer plan to give out free miles based on the dollars you spend instead of the number of miles you fly. i'm actually not all that surprised by it but here's what the yahoo! poll came out. we asked if you think this is a good idea. 30% say yes, it makes sense. 50% say no, it should be miles-based. 20% say i don't pay attention to my miles. but you know, if you're a business traveler and you ante up for a business or first class ticket, i would think you would want more for that ticket price than someone who flies coach. >> i think you can understand why the airlines want to target the business class passenger. they are worth in revenue terms four to five times as much. it's an obvious place for them to be. i do think it might go to a broader feeling that people are being nickel and dimed by the airlines. particularly delta just took an $8 billion federal tax credit for its losses over recent years. >> i agree. there used to be a relationship between fares and distance and there isn't anymore.
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why should somebody who spends $1,000 for first class get the same frequent flyers as somebody who spends $250? simon's right. they are paying for access to their biggest payers. however, it shouldn't be called frequent flyer. it should be called fat cat payer program or something like that. >> somehow i don't think that last one's going to fly. >> it's the 1%. >> it is, absolutely. let's move on to president obama. his nominees to be ambassadors to norway, argentina and hungary facing hurdles because during senate hearings, it was revealed that the nominees have little or no knowledge of their countries that they are being nominated to go to. the three nominees combined did raise more than $4.2 million for the president's re-election campaign. bob, you're first. >> look, obviously there should be some minimum standards for everyone. i think the association is trying to develop those minimum standards. i'm surprised they really haven't done that beforehand. that said, though, we have known
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for years that people who pay up for contributions to presidential campaigns get ambassadorships, particularly to very small countries. not to london but small countries in africa, for example. it's been done for many, many years. >> simon? >> i think if there's a real problem with it, vote against it on capitol hill. don't let it go through. but they won't. they will go along party lines. at least it's obvious you can see what's happening rather than taking taxpayers' money in some sort of pork belly type thing. >> right. >> pork barrel. >> pork barrel. >> you know what i mean. >> i knew exactly what you meant. all right. anybody who went on to the "new york times" home page today may have been in for a bit of a scare. the fx show the americans bought a home page ad takeover that temporarily turns all of the text into russian. we reached out to the "new york
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times." they said they worked directly with fx but would not disclose how much money that ad cost. fx has not returned our call. you know, puts me in a quandary because i have a problem with that. i have a problem with selling out your entire home page -- >> i don't -- >> you don't? >> i don't have a problem. it's clear, you can see what's happening. i have done this for 25 years. the great danger in journalism is you work for underfunded newsrooms where the commercial pressure is so great that behind the scenes, they bend in the wind. they want to do it explicitly, if the "new york times" wants to be a really well funded newsroom, that's great. somehow, they've got to pay the bills and we know that everybody's having difficulty making money from journalism in the traditional sense. >> very interesting perspective. bob? what do you think? >> i think the standard should be is the "times" either lying or outright deceiving its readers and its viewers. >> come on. people are wiser than that. >> i'm asking the question,
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simon. i think the question should be are they lying or deceiving to the viewers and i think they are not in this case. however, it does get close. i agree, i have the same -- i don't think it crosses that line at all. it does get close. >> it made me uncomfortable. i guess perhaps that's the best way to do it. simon, i found your perspective very interesting. as long as it's clearly labeled, almost like an infomercial. same sort of thing. >> let me see that you are advertising. let me see. that's fine. let's get on with life. >> thanks, guys. we will take a quick break. then the top stock winners of the day. tdd#: 1-888-648-6021 there are trading opportunities tdd#: 1-888-648-6021 just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you
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1848 is the number on the s&p. if we can hold that going through the end of the session, that will be a new record high, a record close. the top ten winners today, newfield's doing well but i think it's the retailers that really are sparking a lot of people's imagination. target, if you look over the last six months, has underperformed the broader market by a staggering 25% so that's some give-back today. lowe's in the wake of that
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report as well also doing reasonably well. >> the home builders have been doing well. ivy zelman's interview today really moved those stocks. there is very interesting pockets of strength. it's been fun, simon. thanks. >> i always enjoy it. thank you very much. that is it for "power lunch." >> "street signs" begins right now. i did that for you guys. the market is tired of fast moves. it wants somebody who will spend some time with some stocks. as we slowly march our way even higher, we have got some slow hand stock picks for you. hey, you're mandy drury. >> i am mandy drury. >> how you feeling? >> last time i checked i was mandy drury. >> sound a little different. how you feeling? >> i've got a barry white voice today. >> very cool. so i will take this. here's what else is topping today's show besides the picks. why against all odds the

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